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Exam 7: Inventory and Cost of Goods Sold

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Question 31

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Which of the following inventory costing method is not permitted by ASPE and IFRS in Canada?

A) FIFO.
B) LIFO
C) Specific identification method
D) Weighted average cost method

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Question 32

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The following company buys and sells identical collectors' coin sets.The company uses LIFO.Each coin set is identified by its letter and its cost in the first two columns below.Column 3 indicates when coin sets were sold. For each inventory costing method given below,fill in the blanks to indicate the letter of the coin set which will be used to calculate either cost of goods sold or the cost of ending inventory. PERIODIC INVENTORY: Inventory is taken on December 31,2018. Cost of Goods Sold = _____ + _____ + _____ + _____ + _____ Ending inventory = _____ + _____ + _____ PERPETUAL INVENTORY Cost of Goods Sold = _____ + _____ + _____ + _____ + _____ Ending inventory = _____ + _____ + _____ This example shows the cost of the coin sets increasing over time.Using the symbols " > " (greater than)," = " (equals),or " < " (less than),complete the following comparisons by filling in the blanks in the statements below Using LIFO with increasing costs,cost of goods sold under periodic inventory _____ cost of goods sold under perpetual inventory. Using LIFO with increasing costs,ending inventory under periodic inventory _____ ending inventory under perpetual inventory. Using LIFO with increasing costs,net income under periodic inventory _____ net income under perpetual inventory.

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PERIODIC INVENTORY: Inventory is taken o...

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Question 33

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Specific identification method would be appropriate inventory costing method for a grocery store chain.

During a period of rising prices,LIFO results in a lower income tax expense than does FIFO.

Alphabet Company buys different letters for resale.It buys A thru G on January 1 at $4 per letter,and sells A and E on January 15.On February 1,it buys H thru L at $6 per letter and sells D,H and J on February 9.It then buys M thru R on March 1 at $7 per letter and sells N on March 19.If the company uses the LIFO method on a perpetual basis,what is the cost of its ending inventory?

For a company making cheese,Cured cheese that is waiting to be shipped to retailers would be included in which of the following?

If the inventory turnover ratio increases,the days to sell measure decreases.

Which of the following inventory method will give the highest ending inventory in a period of rising prices?

Only the LIFO and weighted average calculations differ between periodic and perpetual inventory systems.

During 2018,Shockglass Company recorded inventory purchases of $45,000 and cost of goods sold of $50,000.If inventory at the beginning of the year was $15,000,the ending inventory balance must have been:

In March,BetterBuy purchases six plasma TVs from Toshiba for $1,500 each (serial numbers 11534892 through 11534897) .In April,the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634) .In May,the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968) .In June,BetterBuy sells two of these TVs (serial numbers 11534894 and 11542631) . If BetterBuy uses the weighted average method,its cost of goods sold will be:

The days to sell measure equals 365 divided by the receivables turnover ratio.

Days to sell looks at the total number of days from purchase to sale.

When the lower of cost and net realizable value (LC&NRV) rule requires an inventory adjustment:

The LIFO inventory costing method assumes that the costs of the units most recently purchased are:

Alphabet Company,which uses the periodic inventory method,buys different letters for resale.It buys A through G in January at $4 per letter.It buys H through L at $6 per letter.It buys M through R in March at $7 per letter.It sells A,D,E,H,J and N in April. If the company uses the LIFO method,what is the cost of its ending inventory (rounded to the nearest dollar) ?

When the weighted average inventory costing method is used,ending inventory and cost of goods sold are calculated using different costs per unit.

Alphabet Company buys different letters for resale.It buys A thru J on January 1 at $4 per letter,and sells C on January 15.On February 1,it buys K thru L at $6 per letter and sells A and K on February 9.It then buys M thru O on March 1 at $7 per letter and sells F,L,M,N,and O on March 19.If the company uses the LIFO method on a perpetual basis,what is the cost of goods sold?

The Acme Corporation buys 300 units of merchandise in January at $5 each.Acme buys 500 units at $4 each in February and 200 units at $6 each in March. Acme sells 300 units during this quarter.Acme uses the LIFO method.What is its cost of goods sold for the quarter?

A higher inventory turnover ratio is preferable to a lower one.